The challenge
Deal sourcing helps investors find niche markets and assess the financial state of the companies in them, but the process is very time-consuming. It is made harder by the limits of the industry classification system used in the European Union.
Every company registered in the German Commercial Registry must describe its main business activities, yet EU classification systems such as NACE (Nomenclature of Economic Activities) do not cover new and emerging fields. There is, for example, no relevant code for companies focused on machine learning and artificial intelligence. Keyword search does not help much either, because it does not return companies that are semantically relevant to the query. As a result, private equity funds and business development companies struggle to explore niche markets and find the companies within them.
Our solution
We developed an end-to-end solution based on Natural Language Processing techniques and deep learning models. It collects, processes, analyses and displays data from different sources, and lets users run semantic and syntactic searches, explore clusters of companies and review similar companies.
A scraper extracts information from public data sources into a database holding each company’s name, registration date, status (active or inactive) and description of commercial activity. Pre-trained deep learning models such as multilingual BERT vectorise the company descriptions, so that companies can be clustered by semantic similarity. Semantic search works the same way: the search term is vectorised and matched against the closest descriptions in the database.
- Scraper that aggregates public registry data into a company database
- Vectorisation of company descriptions with multilingual BERT
- Clustering of companies by semantic similarity, with user control over cluster size and similarity threshold
- Semantic search that returns the companies closest in meaning to a search term
- Extraction and aggregation of financial data to track companies, individually or as a group, over time
- Export of the results as a PDF report
The outcome
The client, a private equity company, gained an advanced toolset to explore the market and get insights into specific industries. The solution made deal sourcing more efficient, reducing an analyst’s workload by a week for every new niche market discovered.
The same approach is useful beyond private equity: it can help market analysts produce reports and analyse industry trends, or help business development managers find relevant companies for their product offering.
